Income tax accounting?

On January 1, 2006, Pluto and Xena own 50 percent of the stock in Drawf Inc., a calendar-year C croporation. The remaining 50 percent of the corporation's stock is owned by an unrelated partnership. On January 31, 2006, the partnership dissolves and distributes its shares in Dwarf, Inc. to its partners. Will Dwarf, Inc. be treated as an S corporation for federal tax purposes in 2006 if it files a properly completed Form 2553 by March 1, 2006?

No.

Since an S-Corp cannot have a partnership as an owner, your earliest election qualification date would be 2/1/2006.
Since Dwarf is on a calendar year basis, your next opportunity is 1/1/2007.

"A corporation (entity) not making the election for its first tax year in existence that is keeping its current tax year should enter the beginning date of the first tax year for which it wants the election to be effective"

http://www.irs.gov/pub/irs-pdf/i2553.pdf

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